[Federal Register Volume 78, Number 68 (Tuesday, April 9, 2013)]
[Notices]
[Pages 21123-21125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-08217]
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FEDERAL TRADE COMMISSION
[File No. 111 0034]
Charlotte Pipe and Foundry; Analysis to Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint and the terms of the consent order--embodied in the consent
agreement--that would settle these allegations.
DATES: Comments must be received on or before May 2, 2013.
ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/charlottepipeconsent online or on paper,
by following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write ``Charlotte Pipe, File
No. 111 0034'' on your comment and file your comment online at https://ftcpublic.commentworks.com/ftc/charlottepipeconsent by following the
instructions on the web-based form. If you prefer to file your comment
on paper, mail or deliver your comment to the following address:
Federal Trade Commission, Office of the Secretary, Room H-113 (Annex
D), 600 Pennsylvania Avenue NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: William L. Lanning (202-326-3361),
FTC, Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC
20580.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis to Aid Public Comment describes the terms of the
consent agreement, and the allegations in the complaint. An electronic
copy of the full text of the consent agreement package can be obtained
from the FTC Home Page (for April 2, 2013), on the World Wide Web, at
http://www.ftc.gov/os/actions.shtm. A paper copy can be obtained from
the FTC Public Reference Room, Room 130-H, 600 Pennsylvania Avenue NW.,
Washington, DC 20580, either in person or by calling (202) 326-2222.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before May 2, 2013.
Write ``Charlotte Pipe, File No. 111 0034'' on your comment. Your
comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to
remove individuals' home contact information from comments before
placing them on the Commission Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment does not include any
sensitive health information, like medical records or other
individually identifiable health information. In addition, do not
include any ``[t]rade secret or any commercial or financial information
which * * * is privileged or confidential,'' as discussed in Section
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR
4.10(a)(2). In particular, do not include competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR
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4.9(c).\1\ Your comment will be kept confidential only if the FTC
General Counsel, in his or her sole discretion, grants your request in
accordance with the law and the public interest.
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\1\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
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Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/charlottepipeconsent by following the instructions on the web-based
form. If this Notice appears at http://www.regulations.gov/#!home, you
also may file a comment through that Web site.
If you file your comment on paper, write ``Charlotte Pipe, File No.
111 0034'' on your comment and on the envelope, and mail or deliver it
to the following address: Federal Trade Commission, Office of the
Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue NW.,
Washington, DC 20580. If possible, submit your paper comment to the
Commission by courier or overnight service.
Visit the Commission Web site at http://www.ftc.gov to read this
Notice and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before May 2, 2013. You can find more information,
including routine uses permitted by the Privacy Act, in the
Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
Analysis of Agreement Containing Consent Order To Aid Public Comment
The Federal Trade Commission (``Commission'' or ``FTC'') has
accepted, subject to final approval, an Agreement Containing Consent
Order (``Consent Agreement'') from Charlotte Pipe and Foundry Company
(hereinafter ``CP&F'') and its wholly-owned subsidiary, Randolph
Holding Company, L.L.C. (hereinafter ``Randolph'') (hereinafter jointly
referred to as ``Charlotte Pipe'' or ``Respondents''). The purpose of
the Consent Agreement is to address the anticompetitive effects
resulting from Charlotte Pipe's 2010 acquisition (the ``Acquisition'')
of the cast iron soil pipe (``CISP'') business of Star Pipe Products,
Ltd. (``Star Pipe''). The parties to that transaction also entered a
``Confidentiality and Non-Competition Agreement.'' The Acquisition was
not reportable under the Hart-Scott-Rodino Antitrust Improvement Act of
1976, 15 U.S.C. 18a (``HSR Act''). The administrative complaint
(``Complaint'') alleges that the Acquisition violated Section 7 of the
Clayton Act, 15 U.S.C. 18, and Section 5 of the Federal Trade
Commission Act, 15 U.S.C. 45.
Under the terms of the proposed Consent Agreement, Charlotte Pipe
is: required to provide prior notification to the FTC, for a period of
ten years, of an acquisition of any entity engaged in the manufacture
and sale of CISP products in or into the United States; prohibited from
enforcing the ``Confidentiality and Non-Competition Agreement'' against
Star Pipe; and required to inform its customers and the public of the
Acquisition and other transactions involving other CISP competitors.
The proposed Consent Agreement has been placed on the public record
for 30 days for receipt of comments from interested members of the
public. Comments received during this period will become part of the
public record. After 30 days, the Commission will review the Consent
Agreement again and the comments received, and will decide whether it
should withdraw from the Consent Agreement or make final the
accompanying Decision and Order.
The purpose of this Analysis to Aid Public Comment is to invite and
facilitate public comment. It is not intended to constitute an official
interpretation of the proposed Consent Agreement and the accompanying
Decision and Order or in any way to modify their terms.
The Consent Agreement is for settlement purposes only and does not
constitute an admission by Charlotte Pipe that the law has been
violated as alleged in the Complaint or that the facts alleged in the
Complaint, other than jurisdictional facts, are true.
I. The Complaint
The Complaint makes the following allegations.
A. The Respondents
CP&F is a privately-held corporation with its principal place of
business located at 2109 Randolph Road, Charlotte, NC 28207. CP&F is
one of the largest producers and sellers of CISP products in the United
States.
Randolph is a wholly-owned subsidiary of CP&F. Randolph, acting on
behalf of CP&F, executed both the Acquisition agreement as the
``Buyer'' of Star Pipe's CISP business and the ``Confidentiality and
Non-Competition Agreement'' referenced herein.
B. The Product and Structure of the Market
CISP products are components of pipelines systems used in buildings
to transport wastewater to the sewer system, to vent the plumbing
system, and to transport rainwater to storm drains. The end-users of
CISP products are construction firms, plumbers, or developers.
The relevant line of commerce within which to analyze the effects
of the Acquisition is the market for the sale of CISP products for use
in commercial, industrial, and multi-story residential buildings in the
United States. Plastic products are not a viable substitute for CISP
products because state and local building codes in the United States
generally require the use of CISP products in commercial, industrial,
and multi-story residential buildings.
The relevant geographic market within which to analyze the effects
of the Acquisition is no broader than the United States, and may
contain smaller geographic markets consisting of states, multi-state
regions, or metropolitan areas.
The United States CISP products market is highly concentrated. At
the time of the Acquisition, two firms, Charlotte Pipe and McWane Inc.,
sold in excess of ninety percent of the CISP products in the United
States. Companies that sell imported CISP products, including Star
Pipe, accounted for the remaining sales.
C. Star Pipe and the Acquisition
In 2007, Star Pipe entered the United States CISP products market.
Between 2007 and 2010, Star Pipe expanded its sales base throughout the
United States. In contested markets, Star Pipe acted as a disruptive
force, competing on price and service to the benefit of consumers.
In July 2010, Charlotte Pipe executed an Asset Purchase Agreement
with Star Pipe to acquire the assets of Star Pipe's CISP business for
approximately $19 million. Pursuant to the agreement, Charlotte Pipe
purchased, among other things, Star Pipe's inventory, its production
equipment located in China, and its business records and customer list.
The parties to the agreement also executed a ``Confidentiality and Non-
Competition Agreement'' that prohibited Star Pipe and certain Star Pipe
employees from competing with Charlotte Pipe in the United States,
Mexico, and Canada for a period of six years. In addition, Star Pipe
agreed to keep the Acquisition confidential and to
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send to its customers a letter indicating that it had decided to the
exit the CISP business. After the Acquisition, Charlotte Pipe destroyed
the CISP production equipment that it acquired from Star Pipe.
D. Conditions of Entry
Entry into the relevant markets would not be timely, likely, or
sufficient in magnitude, character, and scope to deter or counteract
the anticompetitive effects of the Acquisition.
E. Effects
The effects of Charlotte Pipe's acquisition of Star Pipe's CISP
business have been a substantial lessening of competition in the
relevant markets. Specifically, the Acquisition has: eliminated actual,
direct, and substantial competition between Charlotte Pipe and Star
Pipe in the relevant markets; substantially increased the level of
concentration in the relevant markets; eliminated a maverick firm;
increased the ability of Charlotte Pipe unilaterally to exercise market
power; and prevented Star Pipe and certain Star Pipe employees from re-
entering the CISP products market for a period of six years.
II. The Proposed Order
Paragraph II of the Proposed Order requires Charlotte Pipe to
provide prior notification to the Commission of an acquisition of any
entity engaged in the manufacture and sale of CISP products in or into
the United States. This paragraph also requires Charlotte Pipe to
comply with premerger notification procedures and waiting periods
similar to those found in the HSR Act.
This provision is necessary because Charlotte Pipe has previously
acquired several firms in the CISP products market in non-reportable
transactions. The Proposed Order affords the Commission an appropriate
mechanism to review all proposed acquisitions by Charlotte Pipe in the
CISP products market to guard against future anticompetitive
transactions.
Paragraph III of Proposed Order prevents Charlotte Pipe from
enforcing the Confidentiality and Non-Competition Agreement. This frees
Star Pipe, and its current and former employees, to enter and compete
against Charlotte Pipe in the United States, Canada, or Mexico.
Paragraphs IV-VII impose reporting and other compliance
requirements. In particular, Charlotte Pipe is required to send a
letter to its customers and to maintain a link on its Web site relating
to the Acquisition and Charlotte Pipe's other non-reportable
transactions, including Matco-Norca in 2009, DWV Casting Company
(``DWV'') in 2004, and Richmond Foundry, Inc. (``Richmond Foundry'') in
2002. This provision is appropriate because Charlotte Pipe's
confidential acquisitions are not widely known in the CISP industry and
have given rise to a perception among distributors and end-users that
importers of CISP products are transient and unreliable operations. The
proposed order serves to inform market participants about Charlotte
Pipe's role in the exit of Star Pipe, Matco-Norca, DWV, and Richmond
Foundry from the CISP industry.
The Proposed Order will expire in 10 years.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2013-08217 Filed 4-8-13; 8:45 am]
BILLING CODE 6750-01-P